13. Covaccine is working on developing vaccines for the past few years. Covaccine has the following dividend history Year Dividend per share Recently paid 210 Bz Last year Two years ago 180 Bz Three years ago 160 Bz 190 Bz The rate of return required in this risk class is 25 per cent. Covaccine has developed the vaccine for COVID- 19 and plans to launch it commercially. Assuming that the growth rate in future will be double of its historic growth rate, what is the value of one share?

13. Covaccine is working on developing vaccines for the past few years. Covaccine has the following dividend history Year Dividend per share Recently paid 210 Bz Last year Two years ago 180 Bz Three years ago 160 Bz 190 Bz The rate of return required in this risk class is 25 per cent. Covaccine has developed the vaccine for COVID- 19 and plans to launch it commercially. Assuming that the growth rate in future will be double of its historic growth rate, what is the value of one share?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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If the value of sustainable investing is $158.7 and the discount rate is 5.8% while the value of non-sustainable investing is $22.81 and the expected value of the company is $27.14. What is the assumed probability of being sustainable given a 5 year horizon? (Answer in percent to 2 decimals)
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10. Foodie plc has developed a new flavour which has had rave reviews in the nutrition press. The company paid a dividend of 120 baiza per share recently and the next is due in one year. Dividends are expected to rise by 20 per cent per year for the next four years while the company exploits its technological and marketing lead. After this period, however, the growth rate will revert to only 7 per cent per year. The rate of return on risk-free securities is 6 per cent and the risk premium on the average share has been 5 per cent. Foodie is in a systematic risk class which means that the average risk premium should be adjusted by a beta factor of 1.2. Calculate the value of one share in Foodie plc.
5. Suppose you are evaluating the following potential investment project: Spend $34 million today on a factory in Alabama that will be completed in 1 year. You expect to receive $12 million in profits from this factory at the end of the second year, at which time you also expect to sell the factory to Toyhonda, a Japanese competitor, for a further $30 million. The market interest rate is 9%. (Assume the inflation rate is constant at 0, and is expected to remain so for the duration of the above investments.) Would this plan generate profits enough to cover the investment cost? Yes b. No c. break-even (i.e., no profit nor loss) a.
Give typing answer with explanation and conclusion 1. If the value of sustainable investing is $171.1 and the discount rate is 8% while the value of non-sustainable investing is $15.7 and the company has a 28.7% probability of being sustainable. What is the expected value today of the company given a 18 year horizon? (Answer to 2 decimal places in $).
Ivy's Ice Cream is looking at an opportunity that would require an investment of $900,000 today. The investment will provide cash flows of $250,000 in the first year, $400,000 in the second year, and $600,000 in the third year. If the interest rate is 8%, what is the NPV of this investment opportunity? Should Ivy's Ice Cream move forward with this investment based on the NPV? (Round your answer to the nearest whole dollar.)
Towson Industries is considering an investment of $256,950 that is expected to generate returns of $90,000 per year for each of the next four years. Using the IRR formula in the textbook and the Appendix B PV FV Tables.pdf download, what is the present value factor for this investment? Given the answer above, what is the investment’s internal rate of return? and Use the appropriate EXCEL spreadsheet in the Chapter11 TVOM Examples.xlsx downloadto prove your answer above: Using the appropriate EXCEL spreadsheet, the answer = PLEASE NOTE: All PV Factors will be rounded to three decimal places (i.e. 1.234). Round your IRR answers, in percentage format, to one decimal place (i.e. 12.3%).
9
Suppose natural gas experiences a 1.8% increase per year in real terms over the foreseeable future. The cost of a 1,000 cubic feet of natural gas is now $7.50. Solve, a. What will be the cost in real terms of 1,000 cubic feet of natural gas in 22 years? b. If the general price inflation rate (e.g., the CPI) for the next 22 years is expected to average 3.2% per year, what will a 1,000 cubic feet of natural gas cost in actual dollars 22 years from now?
1
9. Hard Spun Industries (HSI) has a project that it expects will produce a cash flow of $3.7 million in 13 years. To finance the project, the company needs to borrow $2.5 million today. The project will also produce intermediate cash flows of $250,000 per year that HSI can use to service coupon payments of $125,000 every six months. Based on the risk of this investment, market participants will require a 9.5% yield. If HSI wishes a maturity of 13 years (matching the arrival of the lump sum cash flow), what does the face value of the bond have to be? Recall that the compounding interval is 6 months and the YTM, like all interest rates, is reported on an annualized basis. (Enter just the number in dollars without the $ sign or a comma and round off decimals to the closest integer, i.e., rounding $30.49 down to $30 and rounding $30.50 up to $31.) Enter answer here
Over the next three years, the company Paris is expected to pay dividends as follows: Time 1 2 3 Dividend 15 20 24 Thereafter, Paris dividends are expected to grow at a constant rate of 5% per year. Paris should reinvest 40% of its benefits from T = 2. The expected return regarding Paris stocks is 15% Calculate the stock price at the end T 2. If Paris keeps 40% of its EPS to reinvest in new projects, what must be the retum rate of new investments in order to achieve the dividend growth of 5%? What is the stock price today? If Paris changes its dividend distribution policy and decides to distribute all its benefits to its shareholders from T 3, what would be the impact of this policy on the stock price? Comment on the result.

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